If a narrative feature film doesn't open well in the first week, it's a failure.

"It's day-old bread," explains Perry Katz, a consultant to the Motion Picture Group at IPSOS OTX Media CT, and former head of research for Columbia Pictures and Metro-Goldwyn-Mayer and of marketing at Universal Pictures. "By the time Monday comes around, if you haven't established your flag in the sand, then you're forgotten in a week."

Theaters will not hold over a movie that does not perform in its first week—really, its first weekend. There are so many competing movies being released every week that they will pull it off a screen and put another one up. To be successful, a movie has to develop a relationship with its customers fast, or risk getting lost in the crowd of other films.

How competitive is the market? According to The Motion Picture Association of America (MPAA), 560 films were theatrically released in the U.S. and Canada in 2010, and as many as 706 were rated (G, PG-13, R, etc.) for public release. This means that nearly 20 percent of the films that were rated never made it to any theater in the U.S. or Canada. Add to that 2,126 feature films certified for production in India and 520 in China—not to mention Latin America and Europe, two other major markets.

"Because there are so many films still being released, and there's just so much shelf space, exhibitors will pull your movie if you haven't established yourself," laments Rob Hollocks, vice president and creative director for interactive media at New Wave Entertainment, a marketing and content creator that has worked on Avatar, Black Swan, and the Blu-Ray release of Star Wars.

Consequently, just before the release of a major, big-budget, "tent pole" feature film, the market is flooded with ads. It's like a political campaign. A major studio buys so much ad space on TV, radio, in print, billboards, etc., that a film's presence becomes ubiquitous. Tens of millions of dollars are spent with the goal of taking public awareness from, say, 20 percent up to 80 percent. That's the kind of penetration a big movie demands to recoup its investment.

Campaigns are furious. Just how much ROI a feature is able to pull from any one given piece of a bigger media strategy is often difficult to assess. Yet, tent poles consistently spend big without being able to follow every dime, as in other industries.

"If you've got a movie that costs $120 million—let's say you have Sherlock Holmes—you've got so much money wrapped up in production, you need to protect that investment," explains Katz. "You're not going to take a chance by not spending against it on television.

"Could you have done better if you just let it simmer?" he asks. "Possibly. But who's going to take that chance? I wouldn't want it done with my movie and I'm sure you wouldn't want it done with yours."

DVDs Take a Fall

Add to that a number of shifts in the market that have posed challenges for the way movies have done business in the past. One of the biggest has been an erosion of DVD purchases and rentals and the rise of digital subscription and streaming consumption.

"DVD used to be our cash cow; if we didn't make money at the theatrical release, you could always try to pick it up on the backend in the DVD release," says Katz.

In the first quarter of 2011, U.S. DVD sales fell 20 percent, according to a study by Digital Entertainment Group (DEG). DEG also has found that home video sales and rentals have been steadily falling from their high-water mark of $21.8 billion in 2004. In 2010, they stood at $18.8 billion. Meanwhile, consumer spending on streaming and subscription services, such as Netflix, rose 33 percent to $695 million.

As those numbers suggest, the pickup in streaming and subscription services isn't making up the deficit in DVD sales.

"Maybe in five years," Katz speculates, "but it's not the same kind of tsunami we saw when people switched over from buying videocassettes to DVDs."

To respond, the industry has shortened the life cycle of a film. In the past, studios would often wait six months or as long as a year to release a VHS or DVD copy of a film. They'd wait, milking extra money from second-run theaters and building anticipation for a release. The time to television was even longer. Now it's only three months before you see a DVD, says Hollocks. The reason for the change is that with increased competition and flagging hard media sales, films look to capitalize on the initial excitement and momentum of a theatrical release.

"No one is prepared to wait anymore," Hollocks asserts. "Everything now is about trying to manage that entire life cycle and making it more integrated than it used to be."

He explains that in the past, different stages of a release—like video, TV, etc.—were handled by different departments, often with their own separate strategies. With the timescale between releases collapsing, however, they cannot act independently. A DVD has to be planned for the moment a theatrical release begins. The challenge is keeping people interested in a movie as it moves from one format to another (like from theaters to DVD) without cannibalizing the business of the preceding format. One way to do that is to keep adding content in successive stages—essentially "adding value" with each step. This might take familiar forms like bonus features (deleted scenes, commentaries, etc.), but increasingly is about new narrative content.

"We're doing story extensions that carry the story beyond the film," Hollocks says. "So we're doing viral videos, short story extensions that don't necessarily focus on key characters but can take a peripheral character or secondary storyline and expand the universe of the movie in interesting ways. It's about becoming more immersed in the process of the storytelling, as opposed to it being just about marketing."

Power of a Brand

This "immersive experience" is part of the reason that franchise movies, based on existing intellectual properties, like superheroes, have become so prevalent in Hollywood. Films with an established brand have a known staying power and are reckoned to be able to jump through the successive hoops of a distribution life cycle. To Hollocks' mind, no studio has been better at leveraging its brand than the Marvel Entertainment Group.

Marvel has been playing a long-term game, releasing a number of films about individual heroes (Iron Man, Captain America, the Fantastic Four, etc.) with the long-term goal of having them all converge in one mega movie, The Avengers, about a team consisting of all of them.

"The stuff they're doing is innovative. They're interweaving the stories and they're interweaving their licensing and comic book franchising and creating, effectively, a world," says Hollocks. "It's a world people can dip into and become a part of. The long-term vision of that campaign has been really unique in the industry."

Overseas Success

Another longer-term shift in the industry has been the growth of the "international market." To get returns on increasingly expensive movies, Hollywood has turned to Europe and developing markets in Asia and Latin America. Most tent pole films now make more in the rest of the world than they do in the U.S. For instance, Avatar pulled only 27.3 percent of its gross from the U.S. and made more than $2 billion internationally. Similarly, the final Harry Potter film made 71.4 percent of its money outside of the U.S., and The Social Network bagged 56.9 percent of its gross revenue abroad.

The importance of the international market has had deep implications for the creative decisions made by filmmakers, too. For example, less dialogue-heavy movies, where less is lost in translation, transcend cultural borders more easily. Hence, action movies or reboots like Footloose, which revels in long, splashy dance sequences, are made with increasing frequency.

Small Films, Big Challenges

These sorts of bigger Hollywood movies, however, are not the entire face of the film industry. They don't even make up most of the films that are produced every year in the U.S. Most of the films made each year are smaller, independent films. The MPAA reports that in 2010, of the 706 features made, 532 were by nonMPAA members—or indies. Often made with far less resources at their disposal, independent features have to be shrewdly strategized in their release if they are to be successful. Every dollar invested has to see a return. With budgets that are sometimes as small as $30,000, you can forget about most media buys. Rather, independent features rely on strong showings in film festivals, reviews in major outlets, and (like the majors) a coup in their opening week.

One of the much-talked-about success stories in the world of smaller-scale independent filmmaking was 2010's Tiny Furniture. A smartly written existential comedy, the film was made for between $25,000 and $50,000. It won 2010's Best Narrative Feature at South by Southwest Festival, gained distribution from IFC Films, and grossed $391,674 in its four-month theatrical run. The film's take, while modest when compared to bigger movies, was substantial when you consider its size. On a shoestring budget, Tiny Furniture managed to get a lot of people into theaters and netted something like an eightfold return on its principal investment.

Tiny Furniture's success was built on the strength of the film and the tactical opening campaign that leveraged that strength. Because of the film's smaller budget, its efforts could be (and had to be) more focused. For the premiere, the film's distribution team decided to open on a single screen in New York City. The film, they reasoned, was made in New York City, set in New York City, and made by New Yorkers; they felt it had its best chances at finding a receptive audience there. Leading up to the launch, smaller, private screenings were held, and DVDs were given to key reviewers, bloggers, and other such gatekeepers to try and build word-of-mouth buzz.

The team also used these screenings, and the advance reviews, to gauge interest and define its audience. This is especially important for small independent films, where there are less tools, capital, and opportunities to get word out about a production.

"What you can't do is throw everything against the wall and hope it sticks," says Alicia Van Couvering, one of Tiny Furniture's producers and a well-known figure in independent filmmaking circles. "You have to really, really listen to the responses you get. That's true of all marketing, but especially with movies, you can change your tactics quickly.

"You may find that the people you expect to like your movie don't," she adds. "And then you have to change course very fast."

If you have a small, art house–type film that's gotten a bad review or two from critics you thought might be receptive to a "highbrow" film, this might mean cutting your losses and not continuing to send it to such critics. Instead, Van Couvering suggests that the strategy might have to shift gears to "target more populist critics with more populist messages."

Fortunately, this was not the case for Tiny Furniture, which got rave reviews from several publications, including the New York Times, the Wall Street Journal, and Rolling Stone. In its opening weekend, the movie managed to make $21,235 at the sole theater it played in—the best art house opening for its week, according to Box Office Mojo, a Web site that tracks box office results.

"I think social media helped us a lot," explains Van Couvering. "…We have a million friends, and they brought their friends. It was a movie to see…. It was all over Facebook and Twitter. People had been hearing about it, and hearing that it was good."

Niche Marketing

Van Couvering cautions, however, that social media's place within a film's overall strategy can often be overblown. Tools like Facebook and Twitter cannot, she says, create an audience for a movie from nothing. They serve, rather, as "echo chambers." As people see a movie, and like it, a chorus starts to build and you see positive chatter around it. Having tools like a Facebook page and a Twitter account in place can amplify the conversation, but it can't drive it.

"As marketers, a lot of people have forgotten that social media is still marketing," says Hollocks. "That it's still about finding the hook to engage people in a conversation."

A campaign that uses social media tools to broadcast big, vague messages like "Go see Movie X" or "What do you guys think of Movie X?" is going to get as far as a freight train on a thimble's worth of gas.

It's not mass marketing; you're talking to specific niches," Hollocks asserts. "If you go out with mass messages, you're in danger of alienating your audience. Fans of a title want to know what's relevant about it for them. Good social marketing is getting people to a point where they feel they're having a conversation and a relationship with the people who own the brand."

And when that happens, he says, fans are willing to become the messengers, evangelists, and carnival barkers of a film. Their public conversations with friends become a sincere form of advertising coming to individuals from more trusted sources than, say, an obviously self-interested business entity. They're also intrinsically targeted. People are likely to share similar interests as their friends. Moreover, fans are the cheapest sort of agents a film could have. Their engagements with one another cost literally nothing.

For some years now, the film industry has been spinning tales of El Dorado when it comes to word-of-mouth and social media campaigns. Such tales have been fueled by the success of films like Paranormal Activity, a horror film with a budget of $15,000 that managed to gross an amazing $193,355,800 worldwide, according to Box Office Mojo.

"You can't dispute the most profitable movie of the last five years and its sequels," says Katz. "That campaign cost very little. It was driven largely by word of mouth and social networking."

The Paranormal campaign was the first major studio release to be "marketed virally." It opened in 13 college towns and sold out in 12. During the initial release, people were invited to "demand" the film open in other cities on Eventful.com, a social Web service that lets users track events. Paramount Studios, which distributed Paranormal, said that if the film got one million demands it would do a nationwide release in the U.S. Within two weeks of the film's initial release, demands topped that.

To put that in perspective, it's generally understood that a big, traditional Hollywood film's advertising budget is about as much as its production budget. In reality, they tend to be half to three times as much, but a one-to-one ratio is sort of the rule of thumb. So a movie that had a budget of around $100 million is likely to have spent around $50 million on actually making it and the remaining $50 million on marketing it. If you have double your costs on an already expensive production budget, it makes the burden of profit difficult. So if a film get its margins down, it goes a long way, and hence interest around social media (which is much less expensive than, say, a television ad-buy) is high.

But just what social media can do is limited.

"If [Tiny Furniture] wasn't good, I don't think any of that would have made a difference," says Van Couvering.

In short, a social media campaign is worthless without the underlying value of the movie. People have to fundamentally like it. No amount of social shilling can make people like a film. Paranormal Activity did well because critics liked it (Roger Ebert gave it 3.5 out of 4 stars) and, most of all, audiences liked it—or at least they went to see it. At the end of the day, the most important thing for a movie to be is to be good, to have value—a reason for people to want to connect to it.

"The biggest challenge as a filmmaker is to find and make work that is distinctive and unique and new," says Van Couvering. "Everyone wants the same thing. We want something we haven't seen before and…like"—which means doing something new.

Van Couvering worries that Tiny Furniture's success has created "something of a monster." She says that she has meetings all the time where filmmakers want to make something like it for about the same amount of money. The kind of stories that can be told for $50,000 are limited, though. They're confined to readily available spaces and resources. And how many movies about people talking in their apartments can be made? How many before there is nothing new left to say and audiences grow tired?

Filmmaking is a fundamentally speculative enterprise with bets only getting so safe. So while it's important to watch for strategies that work, it's a fool's errand to try and blindly copy the success of another. And that has lessons for businesses well beyond the reaches of Hollywood.

Eric Barkin is a freelance writer based in New York. Check out his blog at ericfelipebarkin.wordpress.com.